Question : Which of the following statement are true?
- Equilibrium beyond the full employment level does not lead to rise in the output level.
- To correct the deflationary gap money supply should be decreased.
Option 1: Both are true.
Option 2: Both are false.
Option 3: Statement 1 is true, statement 2 is false.
Option 4: Statement 1 is false, statement 2 is true.
Answer (1)
13th Jan, 2024
Correct Answer:
Statement 1 is true, statement 2 is false.
Solution :
The level of output will not rise as economy is already at full employment level and there is no ideal capacity in the economy.
Money supply should be increased to increase the level of aggregate demand.
Hence, Option C is correct.
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